Wall Street gains on Powell comments, J&J results; Netflix drags

By Amy Caren Daniel

(Reuters) - U.S. stock indexes rose on Tuesday after Federal Reserve Chairman Jerome Powell gave a robust view of the U.S. economy and strong earnings from healthcare gaint Johnson & Johnson reinforced expectations of a solid earnings season.

Powell, discounting the risk that a trade war may derail a global recovery, said the U.S. economy had "several years" of strong jobs and low inflation ahead, and that stable growth may continue if the Fed makes correct policy decisions.

"While the markets have been trending higher since Powell has been speaking, for the most part he simply reiterated what most of us already knew," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

Powell's comments come as investors look for sustainability of earnings growth in quarterly reports of companies in the face of escalating U.S.-China trade dispute.

The earnings of S&P 500 companies are estimated to have surged around 21 percent in the second quarter, according to Thomson Reuters I/B/E/S.

"The most important thing on earnings statements is going to be the guidance because if corporate leaders are starting to issue cautious guidance for third and fourth quarter based on trade tariffs and what's going on in Washington, that will be a concern," Frederick said.

Johnson & Johnson rose 3.6 percent, giving the biggest boost to the S&P and the Dow Industrials, after the company beat quarterly profit estimates on strong sales of pharmaceuticals.

Netflix was down 5.4 percent, pulling back from a drop of as much as 14.1 percent after its quarterly subscriber growth missed expectations. The stock, the second-biggest S&P gainer this year, was the biggest drag on the benchmark index and Nasdaq.

At 13:01 p.m. EDT the Dow Jones Industrial Average was up 66.85 points, or 0.27 percent, at 25,131.21, the S&P 500 was up 12.28 points, or 0.44 percent, at 2,810.71 and the Nasdaq Composite was up 43.33 points, or 0.56 percent, at 7,849.05.

The Nasdaq's gains were powered by Facebook, Google-Parent Alphabet and Amazon.com hitting record highs.

Ten of the 11 major S&P sectors were higher, led by the materials index's 1.3 percent gain.

UnitedHealth dropped 2.6 percent after it topped profit estimates but its medical costs were slightly higher than expected. The stock was the biggest drag on the Dow and weighed on other health insurers.

Goldman Sachs fell 1.2 percent as its trading results were weaker than some rivals and analysts said the better-than-expected profit was due to low-profile businesses.

Advancing issues outnumbered decliners by a 1.52-to-1 ratio on the NYSE and by a 1.65-to-1 ratio on the Nasdaq.

The S&P index recorded 18 new 52-week highs and one new low, while the Nasdaq recorded 64 new highs and 40 new lows.

(Reporting by Amy Caren Daniel, Savio D'Souza and Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)